The government is working on several initiatives, to attract foreign companies looking to reduce their dependency on China, due to coronavirus-triggered disruptions. One of the key initiatives include preparation of huge land pools, to attract potential investors to India.
Due to disruptions in the global supply chain on account of the Covid-19 crisis, many foreign companies are looking to de-risk their business model by reducing their dependency on China and set up manufacturing facilities in other countries.
“We are working on a lot of initiatives. When it comes to land, states prepare their land inventory and we aggregate those and make available to all potential investors,” the government official said.
According to Federation of Indian Export Organisations (FIEO), steps like fixing accountability on state and central government officers to perform in a time-bound manner; deemed approval for all licences and permits if not granted well in time; change in land acquisition law; power connection in one month and bank loan sanction within two months can help in attracting overseas firms.
With stagnant economic activity, production coming to halt and cash flows drying up elsewhere, India should present itself as the most viable destination for global companies looking at other investment destinations.
Despite reduction of corporate tax rates especially for new manufacturing units, bulk of shifting from China is going to Vietnam, Indonesia and Malaysia.
Many trade associations have pointed that apart from ease of doing business, central and state governments will have to develop industrial parks and corridors on lines of China and ensure consistent policy framework for foreign investors, which is a matter of concern for most of them.
It is also pointed that multinational firms would not completely leave China and shift base to other countries, but they are looking at alternatives and India could be one the preferred destinations.
The government has taken steps like promoting ease of doing business and liberalisation of the foreign direct investment norms to attract overseas investors.
India has jumped 14 places to the 63rd position on the World Bank’s ease of doing business ranking released last year. It figured among the top 10 performers on the list for the third time in a row, mainly due to the successful implementation of the Insolvency and Bankruptcy Code.